Latest West Virginia Supreme Court Case Awakens Some Sleeping Giants

On November 7, 2012, the West Virginia Supreme Court of Appeals handed down a ruling on an age discrimination case that has important ramifications for all employers in the state. Although the opinion contained no new points of substantive law, the application of law to the particular facts of this case will likely change the dynamics of employment discrimination lawsuits considerably.

The Facts

In The Burke-Parsons-Bowlby Corp. v. Rice (Case No. 11-0183), the Supreme Court of Appeals affirmed the Circuit Court of Jackson County’s denial of an employer’s motion for a new trial. The motion was filed after a jury awarded $2 million to an employee after finding that he had been discharged based on his age in violation of the West Virginia Human Rights Act, W. Va. Code § 5-11-1, et seq.

The case concerned Jerold John Rice, age 47, who worked for Burke-Parsons-Bowlby for more than twenty years as a controller. In 2008, Burke-Parsons-Bowlby was acquired by Stella-Jones, Inc. Rice’s first review following the acquisition was favorable, and he received a raise. Two months later, Stella-Jones hired a younger employee, age 29, to work as the assistant controller and Rice was directed to teach him everything he knew. Within a month Rice was informed that his position was being eliminated and his employment was being terminated. At trial, the jury concluded that Rice’s termination was motivated by his age and awarded him more than $2 million in lost wages. Stella-Jones filed a motion for a new trial, and that motion was denied. The appeal followed.

Unconditional Offer of Reinstatement

A common strategy employed in wrongful discharge cases is to cut off damages by making the plaintiff an unconditional offer of reinstatement to a position with the defendant. Stella-Jones did exactly that in this case. Before the case went to trial, Stella-Jones offered to reinstate Rice as a controller with the company. In making the offer, Stella-Jones advised Rice (via counsel) that the offer of reinstatement was not connected to the litigation, but that “[u]nder West Virginia law Stella-Jones’ unconditional offer of reinstatement has the effect of cutting off Plaintiff’s back pay, as of the effective date of the offered reinstatement, and any front pay sought.”

Rice rejected the offer, citing concerns about job security. At trial, Stella-Jones sought to exclude evidence about front-pay damages, based on West Virginia law that reinstatement is the “preferred remedy” in wrongful discharge cases, and that failure to accept an offer of reinstatement cuts off front pay. The circuit court, however, concluded that whether Rice should have accepted the offer of reinstatement was “subject to varying inferences,” and allowed the question to be submitted to the jury.

On appeal, the Supreme Court of Appeals affirmed the circuit court’s ruling. The Court concluded that, although the decision of whether to allow front pay following an offer of reinstatement lies within the circuit court’s authority, that decision may be submitted to the jury in cases where “the facts and inferences are in conflict.” The Court noted that a former employee is permitted to decline an unconditional offer of reinstatement “[i]f anything has occurred to render further association between the parties offensive or degrading to the employee.” Since the circuit court properly permitted the jury to make the decision whether Rice should have accepted Stella-Jones’ offer of reinstatement, and the jury found that rejection of that offer was reasonable, Rice was awarded unmitigated front pay damages.

The ruling greatly diminishes the ability of an employer to limit damages in an employment case by making an unconditional offer of reinstatement. Now, a plaintiff need only present some excuse for why he did not accept the reinstatement offer (as nearly every plaintiff will be able to do, based on a unilaterally expressed concern about future job security) and the jury will be able to disregard the reinstatement offer and award unmitigated front pay to a discharged plaintiff.

Evidence of Other Discrimination

At trial, Rice introduced evidence of another individual, Robert Crane, who claimed to be a victim of age discrimination. Crane was originally an employee of another company in (not Burke-Parsons-Bowlby) where he had worked for 35 years before it was purchased by Stella-Jones. Shortly after Stella-Jones acquired the company, Crane was terminated. Stella-Jones challenged the introduction of evidence about Crane at Rice’s trial. The circuit court allowed it, and the WVSCA affirmed, holding that the necessary findings had been made by the circuit court to permit the discovery.

What is notable about this holding is not the specific holding itself – indeed, West Virginia has long allowed the admission of this evidence under certain conditions, and the challenge raised by Stella-Jones was a narrow procedural one. However, this decision applied this prior holding in such a way as to considerably expand the scope of admissible 404(b) evidence. While historically parties and courts have construed the potential scope of admissibility under this provision narrowly, the Supreme Court of Appeals’ latest opinion broadened it significantly. There were several facts that distinguished the two discharges – Crane worked for a different company that produced different products and even operated in a different state (Washington), to name a few. In light of this decision, employers should expect plaintiffs to test the boundaries of this ruling and try to admit evidence of every person who has ever complained of discrimination in the past, even if no close parallels exist.

What does this mean for Employers?

The law announced by the West Virginia Supreme Court of Appeals is not new, but the decision has strengthened the position of a plaintiff in discrimination litigation. First, by allowing a plaintiff to reject an unconditional offer of reinstatement and have a jury determine whether that rejection was reasonable, employers are significantly more limited in how they can limit potential awards of front pay damages in problematic cases. Second, in light of the seeming expansion of admissible “similar actor” evidence regarding other instances of discrimination, plaintiffs will likely seek to discover every past allegation against the employer and use it at trial. In short, we can expect that plaintiffs will litigate their claims with renewed vigor.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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